Adient PLC
Morningstar Rating for Stocks | Fair Value | Economic Moat | Capital Allocation |
---|---|---|---|
$69.00 | Szllxmf | Dqjcdrlrs |
Adient's Fiscal First Quarter Gets Boost From Strong Americas Performance
Adient’s fiscal 2023 first-quarter results showed good year-over-year improvement, but challenges remain in China and Europe. Adjusted diluted EPS of $0.34 came in far higher than the $0.38 loss a year ago but still missed the $0.38 Refinitiv consensus. We are leaving our fair value estimate in place. Adjusted EBITDA rose 45% year over year as improvements in volume, mix, and overhead costs more than offset headwinds from commodities and the strong dollar (mostly against Asian currencies) of about $18 million and $7 million, respectively. The Americas segment led the way in profit growth thanks to volume, mix, and $20 million in manufacturing efficiency improvements from less waste and improved launch costs. Free cash flow improved to a $17 million burn from a $74 million burn as higher EBITDA helped offset less working capital contribution. Freight costs remain a headwind, mostly in the Americas and Europe, and management called out labor inflation costs throughout the earnings call. Customer recoveries from higher materials costs last year are flowing through, which helps, but recoveries for higher labor costs is a slower negotiation with automakers. Traditionally they have not helped suppliers with labor, but Adient says talks are making progress.